February Freezes Restaurant Sales Yet Again
The restaurant industry hit a bump in the road for the first time since May. Before February, same-store sales growth across the industry was positive for eight consecutive months. Restaurants saw a 0.6 percent decline in February, however, according to a report from TDn2K.
“February was the month with the worst same-store sales growth rates for both 2017 and 2018, and it was a disappointing month again this year,” said Victor Fernandez, vice president of insights and knowledge for TDn2K, in a statement. “Sales growth has been negative for the month since 2017, and the cumulative effect was a concerning 5.2 percent drop in sales for February over the last three years.”
Traffic was also affected during this winter month. Same-store traffic growth dropped 3.7 percent—the worst result for the industry since September 2017. Even a 3.1 percent increase, year-over-year, in average check couldn’t offset the effect.
“The last time the industry experienced worse traffic growth results occurred when some of the biggest states in the country where suffering through enormous back-to-back hurricanes in August and September of 2017,” Fernandez added.
Some warmer regions fared better than its colder counterparts. California was the best performing region of the month with a 1.4 percent increase in same-store sales growth. According to TDn2K, the only regions that performed positively in February were the Southeast, Southwest, and California.
The effects of severe winter weather halted growth in the rest of the country. The Midwest was the worst performing region in February, reporting a 5.6 percent drop in traffic and a 2.6 percent decrease in same-store sales growth.
“Bad weather seems to be the catalyst that amplifies the effects of the challenges faced by chain restaurants,” Fernandez said. “There are too many restaurant locations and too many players competing in the food-away-from-home category. Any disruption in the usual routine of consumers seems to be enough to cause a downturn.”
Out of the 196 designated market areas that Black Box Intelligence tracks on a monthly basis, 44 percent, or only 87 markets, performed positively in February. “By contrast, about 73 percent of markets saw positive sales growth during the previous two months,” TDn2K reported.
While the first three weeks seemed to trend positively for most regions, that drastically changed in the final week. The Mid-Atlantic, New York-New Jersey, the Midwest, and New England performed the worst.
The industry’s struggle with staffing continues to be a major concern for restaurants as well. Employee turnover rates keep rising rise and they hit new highs in February. However, the jobs are there. The industry has steadily increased job creation 2 percent, year over year, since December. Finding and keeping qualified employees on staff continues to be an issue.
The labor issues touched all levels of employees from hourly employees to managers. The rise in turnover is causing another issue for restaurants, understaffing. As a result, restaurants are suffering, TDn2K said.
The one silver lining of February was the success of Valentine’s Day in the fine dining sector. For the third consecutive year, the segment reported a boost in strong sales during week of the holiday. Guests are increasing the amount they spend on the holiday. Same-store sales grew by double digits compared to Valentine’s Day week in 2017.